A PRIVATE OWNER FOR PUBLIC HOUSING

By BETSY BROWN

Published: January 10, 1988

A 40-YEAR-OLD public housing project in New Rochelle, still solid but now shabby, graffiti-marked and in need of major repairs, is being sold to a private corporation that will renovate it at a cost of $7 million and continue renting it to 180 low-income families.

The sale of the project, MacLeay apartments on Fifth Avenue near the Larchmont village line, is the first of its kind in the county and possibly in the state. A spokesman for the State Department of Housing and Community Renewal said no one in the department could recall a similar sale of public housing to private owners.

The ''privatization'' of the project is occurring partly as the result of policies of the Reagan Administration, which offers incentives for private ownership of formerly public property.

The New Rochelle Municipal Housing Authority will sell the complex for $440,000. The cost will be paid and the renovation done from $7 million made up from the sale of $5.2 million worth of federally insured tax-exempt bonds, a $1.98 million grant from the Federal Government that is not available to housing authorities, and a $900,000 equity payment by a private corporation headed by Joseph Sorcinelli, a Connecticut housing developer.

The apartments will be owned and managed by the Larchmont Woods Corporation, consisting of the developer and the New Rochelle Neighborhood Revitalization Program, a nonprofit entity.

Apartments will be rented in the same way as they are now - for 30 percent of the tenant's gross income, rather than the market rate, under a contract signed by the Federal Government, the state, the New Rochelle Housing Authority and the developer.

Once the title is passed, probably later this month, the rundown hallways with their broken linoleum floors, scratched metal doors and paint-encrusted walls are to be restored and redecorated, and the 40-year-old kitchens, bathrooms, plumbing and wiring also are to be replaced.

Some of the tenants are skeptical and some frightened at the prospect of the change, however. ''Santa Claus doesn't exist,'' said Phyllis Norman, a teacher's aide at the Rye Neck Middle School who has lived in the housing project for seven years.

''It costs money to renovate a building,'' she said. ''I'm skeptical about it. I saw what happened at Vernon Woods, in Mount Vernon - it was turned into a condo and all the people were moved out.''

''We should have something in writing,'' said Doris Marable, a laboratory technician at New Rochelle Hospital, who has lived in the housing project for eight years. ''They've sent out fliers, but you can't take a flier to court. I believe they're in earnest, but I'm still worried.''

''We don't know these people,'' said Betty Jean Johnson, a tenant for 10 years. ''I'd rather stay with the Housing Authority.''

One of the chief organizers of the sale is John Madeo, vice chairman of the New Rochelle Municipal Housing Council and executive vice president of the New Rochelle Neighborhood Revitalization Corporation.

Mr. Madeo said that he was sympathetic with the fears of tenants, but added that there were several guarantees that the tenants would be able to continue to live there and continue to pay rents based on their income rather than at the market rate.

In the contract, the Federal Government, which is providing the housing grant, has made such rents a requirement for the grant. The contract says the building may not be sold as condominiums for 20 years.

The New Rochelle Municipal Housing Authority has made the same rental requirements, because its main purpose is to provide housing for low-income families. And the private developer, who can earn only 6 percent profit under the contract, will not get the benefit of valuable tax credits unless the tenants are allowed to retain their rental arrangement.

Tenants said they were also concerned about the screening of residents that would occur when the new ownership takes over. The new owners will be able to evict tenants involved with drugs, tenants who have not paid rent and tenants who are destructive.

Mrs. Norman charged that the Housing Authority had moved ''undesirables'' into the MacLeay Apartments from other public housing - a practice that would allow a private owner to evict such tenants and thus remove them from all low-income housing in the city.

The story of the buildings, three plain six-story structures, each with four wings flaring out from a central core, begins in the 1940's.

They were built by the New Rochelle Municipal Housing Authority with funds from the state. The state paid the city a subsidy of $77,000 a year to make up the difference between what the tenants paid in rent and what it cost to keep the buildings going.

The subsidy amount never changed over 40 years, but according to Mr. Madeo, ''the formula worked pretty well.'' Costs went up, but so did the tenants' low incomes, on which the rents were based. Occasionally the city paid for an improvement, and occasionally the state made a supplemental grant. But during those years, there were no repairs to the major systems, except last year when the authority put in all new windows, at a cost of $200,000, to replace old ones that leaked air and water and were not insulated.